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Technology Stocks : Dell Technologies Inc.

DELL 133.35

+0.1%

Nov 28 9:30 AM EST

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To: SecularBull who wrote (52189)	7/18/1998 7:20:00 PM
From: Chuzzlewit	Read Replies (1) of 176387

LOD, I disagree entirely. Because of the way accounting works, your method will not yield the desired result. For example, suppose a stock is trading at $100 per share but rises to $150 per share and falls back down to $100 at the end of the period. If the company repurchased 100,000 shares at $150 and then issued 100,000 at $100 there would be no effect on the P/L statement and there would be no effect on EPS, but there would be a net decrease in cash of $5MM but it would never be accounted for. If you don't believe me, check it out with your accountant. GAAP doesn't handle this situation properly. Employee stock options add several levels of complexity to the problem. First, because these are equity transactions their true cost is hidden. Second, because these transactions increase the number of shares they are dilutive. Share buybacks simply obscure the underlying problems. Every investor should be aware of this stuff. The effects are real and measurable, but the accounting standards serve to hide rather than illuminate. TTFN, CTC

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